Watermark, KAREA to Create Senior Housing Highrise in Brooklyn

Private equity investor Kayne Anderson Real Estate Advisors (KAREA) is partnering with Watermark Retirement Communities to bring more upscale senior housing to New York City.

KAREA has acquired a historic 16-story building (pictured above) in Brooklyn Heights formerly owned by the Jehovah’s Witnesses, which it will redevelop into private-pay senior living and place under the operational management of Watermark, the companies announced Wednesday.

Tucson, Arizona-based Watermark operated 40 properties and was the 15th-largest senior living operator in the nation last year, according to recent rankings from the American Seniors Housing Association (ASHA). It currently manages two communities in New York state, in the towns of Millbrook and Tuckahoe.

While KAREA did not publicly disclose the purchase price, The Wall Street Journal reported that it was about $200 million and that $100 million is the planned budget for revamping the tower for seniors.

This is the third high-profile senior living project underway in New York City.

Toledo, Ohio-based real estate investment trust Welltower (NYSE: HCN) and McLean, Virginia-based operator Sunrise Senior Living have partnered on a 15-story assisted living and memory care building, while Hunt Valley, Maryland-based REIT Omega Healthcare Investors (NYSE: OHI) is working with Westport, Connecticut-based operator Maplewood Senior Living on a 23-story independent living, assisted living and memory care building. Both of those projects are in Manhattan.

The Sunrise and Maplewood communities are expected to command rents as high as $20,000, and they are banking on pent-up demand due to very little private-pay senior living in NYC.

KAREA noted this lack of supply as well.

“This acquisition will enable KAREA to create value by delivering seniors housing to this incredibly supply-constrained market,” KAREA Managing Partner and CEO Al Rabil said in a press release.

While supply-demand dynamics in New York City are especially stark, other large metros across the country also are hot locations for senior living development, as urban centers attract aging adults.

The KAREA/Watermark building, which was a hotel when it opened in 1928, will be dubbed The Watermark at Brooklyn Heights. Currently, the structure has 310,000 square feet and 295 residential units, as well as a commercial kitchen, large dining rooms, a library and a 20,000 square foot rooftop terrace. After the redevelopment, it will include 75,000 square feet of amenity space, according to KAREA.

“We are honored to partner with Kayne Anderson on another significant landmark project,” stated Watermark President and CEO David Barnes. “Watermark is excited about the opportunity to share our experiences and lessons learned over the past 30 years and to continue to learn from our future residents and associates in the culturally rich, historic Brooklyn Heights neighborhood.”

Written by Tim Mullaney